The chief executive of a renewable energy generator says while the Federal Government deserves congratulations for its white paper on emissions, it must take further action to arrest pollution.

The Government today released details of its plan to source 20 per cent of Australia's electricity from renewables by 2020.

The draft legislation to deliver the Renewable Energy Target (RET) includes a new rebate for households, small businesses and community groups that install solar systems.

The 20 per cent target was an election promise and Treasurer Wayne Swan says it builds on the Government's carbon pollution reduction scheme.

The Government will give people credit worth five times the value of the energy produced, as a subsidy for installing a solar system.

The Greens say the Government should be setting up a feed-in tariff to guarantee prices, instead of a credits scheme, and the Coalition says the subsidy is less than the total amount available under the current rebate system.

'Insufficient' measures

Renewable energy generator Pacific Hydro engages in hydroelectric and wind projects both in Australia and overseas.

Its chief executive, Rob Grant, says while the white paper is to be applauded, it must go much further.

"The introduction of a CPRS [carbon pollution reduction scheme] and targets and structure is something the Government should be congratulated for," he told the ABC's Radio National this morning.

"However, given that the target is currently so low, the caps and penalties are perhaps insufficient based on what the scientists tell us we need.

"The role for renewable energy in the short term will become very much more important than perhaps it was before the announcement of the white paper."

Mr Grant says it is important for a mandated target for renewable energy to be introduced into Parliament because the Australian economy produces about 50 per cent of its emissions from the electricity sector.

"The mandatory target is focused specifically on this sector," he said.

"What the renewable energy target will do [is] allow us to have a soft start to the emissions trading scheme [and] at the same time, through the requirement to have 20 per cent renewable energy, either stabilise or reduce emissions from this very large and carbon intensive sector."

Investment

But he says it is not viable to take action before the mandated target goes through Parliament.

"The mandated target requires a penalty for non-compliance with that target to be announced and legislated," he said.

"It's that penalty that really drives the investment decisions of investors like us. Until we know what that is - and there has been little discussion in papers to date on what that penalty may be - we are obviously reticent to invest."

Past critics of a mandated target, such as the Productivity Commission and the Australian Industry Group, say that the mandatory target distorts the market.

They say it forces people to buy energy from sources that would otherwise be uncompetitive, therefore placing an extra cost on households and business. But Mr Grant disagrees.

"The important thing is that science is telling us we need to make a major cut in our emissions," he said.

"The framework which the Government has announced in the white paper has caps and penalties which are insufficient, and compensation to polluters which is so large that will ensure those targets won't be met in the short term.

"So, it may be appropriate for an economy-wide emissions trading scheme to take some time to get up and running, but we do need to make either a stabilisation or a reduction in our emissions in that transition period.

"Without the RET, the emissions will continue to rise and make the reductions that much more expensive ion the future and probably that much more difficult."